Social Protection – Expenditure Trends

Key Point

Social Protection spending will increase marginally by €52m (0.3pc) in 2017 relative to 2016. Expenditure on working age income and employment supports is expected to decrease by €325m (6.6pc) from almost €5bn to €4.6bn, as unemployment continues to fall.

Context

The Department of Social Protection (DSP) spent €19.8bn in 2016. This was approximately 37pc of gross current Government expenditure. PRSI receipts increased by circa 9pc in 2016, which saw the Social Insurance Fund acquire a surplus (€453m) for the first time since 2007. Spending on pensions continues to increase in line with demographic growth among those of pensionable age.
The Department’s expenditure is spread across seven programme areas. Table 1 shows expenditure in 2016.

Table 1 – Social Protection Expenditure by Programme, 2016

Table 1 shows that pensions accounted for over one-third of total DSP spending in 2016 at €7.1bn. Working age income supports (such as Jobseeker’s Allowance/ Benefit) accounted for €3.9bn or 20pc of total expenditure. Illness, Disability and Carers payments worth €3.7bn or 18.7pc of total expenditure was the third largest programme of spending in 2016.

Pension costs are increasing by approximately €1 billion every five years in line with demographic trends. There are currently over 380,000 recipients of the State Pension (Contributory) and expenditure in 2016 amounted to €4.7 billion. The State Pension (Non-Contributory) is payable to approximately 95,000 people and cost €982m last year.

Social Protection spending of €19.8bn in 2016 was 10.5pc of GNI*1 ; down from a recent peak of 16.0pc of modified GNI in 2011.

Spending Projections

Estimates of social protection spending for 2017 are shown in table 2 below2 .

Table 2

Table 2 shows that expenditure on pensions in both absolute and percentage terms continues to increase; rising by €179m or 2.5pc relative to 2016 (pension rates increased by €5 from March 2017). Illness, Disability and Carers payments will account for the second largest share of spending in 2017 at 19.3pc; replacing working age income supports (18.5pc). The share of total expenditure on children remains largely stable at 13.2pc or €2.6bn.

 

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Notes:

1 Modified GNI (GNI*) is a new indicator that is designed to exclude globalisation effects that are disproportionately impacting the measurement of the size of the Irish economy.

2 The 2017 estimate does not include a provision for a Christmas Bonus in 2017 – the 2016 Christmas Bonus cost circa €220 million.

 

 

 

 

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